Why UAE Local Startups are looking at the Cloud

Jul 26,2021 by Manoj Yadav

The Middle Eastern countries and the United Arab Emirates in particular, is showing an avid interest in cloud computing. With a growing talent pool and more venture capital making its way into this part of the world, new laws and a striking global profile, UAE has all the ingredients for emerging as a hub for technology start-ups.

Incidentally, the start-up sector here is expected to emerge as a hotbed for Virtual Reality, Artificial Intelligence and 3D innovations. The laws here are changing so as to make room for innovations and investments. There is also a huge network of talent in UAE since the best talents from various parts of the Middle East come here. Dubai for instance, has grown into a hub for startups. While people believe that Artificial Intelligence will be next in line, there are some roadblocks there for lack of skills, compared to China and the Silicon Valley. It is believed that some business with partner with already existing AI firms as they have done previously with Microsoft, Google or Amazon for cloud capabilities.

Cloud Hosting UAE: The growth in the adoption

Nearly 70% of the startups in Dubai have already been using cloud hosting technologies and almost 24% have even created their businesses on the cloud. The cloud hosting for startups enables their businesses to grow at a rapid pace. This is why startups all over the UAE are ready to mark their presence for cloud migration irrespective of the huge cost involved and interested in investing in cloud computing to get an edge over their competitors. While Dubai was ahead in most areas of technological advancements, it was surprisingly lagging behind in cloud technologies. While the hunger to make a switch to the cloud is still very much there, the rate of adoption is still slow as there are only limited services available. It is expected that this situation is going to change after the latest announcement by AWS that it will start a data center region by 2019 in the Middle East having offices on Bahrain and Dubai. Amazon has also expressed its interest in opening a Cloud Front Edge base in the UAE.

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According to the Cloud Report of 2017, produced by Thomson Reuters together with IBM, it was found that many startups in Dubai use cloud hosting already and about 38% of those which have not yet started using the cloud plan on adopting these technologies soon enough. While 72% of these startups spend $50,000 or less on IT resources every year, almost 25% spend more than 20% of their budgets for the cloud.  Nearly 80% of the startups expressed an interest to increase their cloud expenses over the next two years. However, amongst those that have not yet embraced the cloud, almost 42% feel that the upfront costs are quite high. They may also be stalling their migration to the cloud for concerns of data security. But Wassim, the Vice President of IBM Cloud, is quite satisfied with the speed of innovations in this region over the last few years. He feels that it is up to them to groom them so that they can flourish in their own environments. The cloud is not something new as cloud technologies were even there in the past 5-6 years but the speed at which these are evolving is much higher now.

This new trend towards the cloud began with cloud storage. So, most startups are currently using cloud storage. However, along with storage benefits, the cloud has many more things to offer. The cloud can offer intelligence, readymade codes which can be used in applications for improving efficiency. So Artificial Intelligence, Machine Learning etc are going to be the game-changers now. Another new wave which is taking this region by storm is the blockchain technology. This is also based upon a cloud-based environment. Dubai seems to be leading this new trend and the authorities have even suggested that this technology should be incorporated in every government department by 2020.

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According to Tina Ghanem, who heads Accelerate SME, Thomson Reuters, there remain some key challenges which are stopping startups here from fully utilizing cloud hosting benefits. These challenges relate to resources, mentorship and knowhow. While there may be a truckload of data for entrepreneurs, there is actually too much of it and it is hard for the people to digest it all together. The terminology is new for them and many of these business owners cannot understand which parts of the information are going to be useful for them. Among the three types of cloud services, 76% of the startups have chosen SaaS or Software as a Service; 32% have adopted PaaS and IaaS. About one-third of startups here use multiple cloud services and nearly 9% use all these three types of cloud services. Web hosting and storage services are held as core services and most start-ups have adopted these first.

As the focus is more on technologies now, all sectors of the economy in UAE are working to bring about a digital transformation. So, it is now important to introduce good quality startups in the region. While there is enough manpower and many new ideas, there is still dearth of high-technology companies. There has however been a slow but steady growth in the recent times in the number of companies developing blockchain and AI technologies.

One of the stumbling blocks for the SMEs is restrictive registration costs together with many bureaucratic hoops which make it hard for them to enter the market on their own. Therefore, for the SMEs, which are keen to break into this region, it is necessary to work with Value Added Resellers or Value Added Distributors that already have working ties with government departments.

The focus should be on winning trust. So, it is not enough to offer cost and technology benefits; government departments and business owners will want security assurances before they can take the leap. Businesses will have to know where the servers are going to be located, who will have access to these, how the servers will be linked etc. The situation is much different in Europe where most businesses take to the cloud assuming that it is safe.

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In keeping with this new trend, Dubai has launched the Smart Dubai 2021 initiative that aims to take this transformation to an altogether different level.  This digital change is expected to bring about a positive impact on Dubai, both in terms of cost savings and happiness of citizens.

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